The Reserve Bank of India (RBI) imposed penalties on IDFC First Bank and LIC Housing Finance
IDFC First Bank and LIC Housing Finance: The Reserve Bank of India ( RBI) imposed financial penalties on IDFC First Bank and LIC Housing Finance for non-compliance with various regulations. The RBI has imposed a penalty of ₹1 crore on IDFC First Bank for non-compliance with certain directions on ‘Loans and Advances – Statutory and Other Restrictions’. On the other hand, The central bank has also imposed a penalty of ₹49.7 lakh on LIC Housing Finance for breach of norms. where they had not complied with certain provisions of the Fair Practices Code.
IDFC First Bank & LIC Housing Finance
IDFC First Bank
IDFC FIRST Bank is an Indian private sector bank set up in 1997 and formed by the merger of the banking arm of Infrastructure Development Finance Company and Capital First, an Indian non-bank financial institution. At present, IDFC First Bank has 23 branches in Madhya Pradesh, Delhi, Mumbai, Hyderabad, Bengaluru, Pune, Chennai, Ahmedabad and Kolkata.. IDFC Bank launched its 100th branch in Honnali, Karnataka, in October 2017. It will have more than 600 branches across India by 2021. The Statutory Inspection for Supervisory Evaluation for FY22 concluded that during the inspection for the fiscal year 2022, it was found that the bank had approved loans to a government-owned company for infrastructure projects without properly checking if those projects were financially sound and likely to generate enough income to pay back the loans. Instead of relying on the income from the projects, the loans were being repaid using funds from the government’s budget. So, they didn’t make sure the projects could pay for themselves and were using government money to pay off the loans.
LIC Housing Finance
Established in 1989 under the Companies Act, of 1956, LIC HFL is a subsidiary of the Life Insurance Corporation of India (LIC), one of the largest insurance companies in India. LIC HFL is a subsidiary of Life Insurance Corporation of India (LIC), one of the largest insurance companies in India. As per RBI reports, LIC Housing Finance didn’t properly disclose important information such as interest rates and the reasons behind charging different rates to different borrowers. Additionally, they imposed penalties for early loan repayment in ways that weren’t allowed under the rules. So, the penalty was for not adhering to these regulations aimed at ensuring fair and transparent practices in lending.
What is the penalty imposed on IDFC First Bank & LIC Housing Finance?
The Reserve Bank of India (RBI) has imposed a penalty of Rs 1 crore on IDFC First Bank and Rs 49.70 lakh on LIC Housing Finance for violating non-compliance with certain directions on ‘Loans and Advances – Statutory and Other Restrictions’ and certain provisions of the Fair Practices Code.
